Question: adidas Group reported the following balance sheet accounts in a recent year (euros in millions). Prepare
the balance sheet for this company, following usual IFRS practices. Assume the balance sheet is reported
as of December 31, 2014.
Property, plant and equipment €1,454 Intangible assets . €2,763
Total equity . 5,617 Total current liabilities . 4,378
Accounts receivable 1,946 Inventories . 2,526
Total noncurrent liabilities . 2,422 Total liabilities 6,800
Cash and cash equivalents . 1,683 Other current assets 1,192
Total current assets . 7,347 Total noncurrent assets . 5,070
Other noncurrent assets . 853
In: Accounting
Group of answer choices
True
False
In: Accounting
Bordey Corporation's Board of Directors declared a dividend payment of $50,000. Bordey has outstanding 16,000 shares of $1 par value common stock and 13,000 shares of 6% $50 par value preferred stock.
What is the per share dividend amount that will be payed to the common stockholders?
Group of answer choices
$3.85
$3.69
$3.00
$0.69
$0.23
In: Accounting
On 1 January 2019, Melor acquired 90% of the equity share capital
of Chempaka in a share
exchange in which Melor issued two new shares for every three
shares it acquired
in Chempaka. Additionally, on 31 December 2019, Melor will pay the
shareholders of
Chempaka RM1.76 per share acquired. Melor’s cost of capital is 10%
per annum. At the date
of acquisition, shares in Melor and Chempaka had a share market
value of RM6.50 and
RM2.50 each respectively.
Statement of Profit of Loss for the year ended 30 September
2019
Melor Chempaka
RM’000 RM’000
Revenue 64,600 38,000
Cost of sales (51,200) (26,000)
Gross profit 13,400 12,000
Distribution cost (1,600) (1,800)
Administrative expenses (3,800) (2,400)
Finance costs (420) -
Profit before tax 7,580 7,800
Income tax expenses (2,800) (1,600)
Profit for the year 4,780 6,200
ACCT2131/June2020 Page 5 of 8
Equity as at 1 October 2018:
Equity shares 30,000 10,000
Retained earnings 54,000 35,000
The following information is relevant:
1. At the date of acquisition, the fair values of Chempaka’s assets
were equal to their
carrying amounts except for these two items:
(i) An item plant had a fair value of RM1.8 million above its
carrying amount. The
remaining life of the plant at the date of acquisition was three
years. Depreciation is
charged to costs of sales.
(ii) Chempaka had a contingent liability which Melor estimated to
have value of
RM450,000. This has not changed as at 30 September 2019.
2. Melor’s policy is to value the non-controlling interest at fair
values at the date of
acquisition. For this purpose, Chempaka’s share price at that date
can be deemed to be
representative of the fair value of the shares held by the
non-controlling interest.
3. Sales from Melor throughout the year ended 30 September 2019 had
consistently been
RM800,000 per month. Melor made a mark-up on cost of 25% on these
sales.
Chempaka had RM1.5 million of these goods in inventory as at 30
September 2019.
4. Chempaka has been profitable since its acquisition by Melor’s
product. The market for
Chempaka has been badly hit in recent months and the goodwill has
been impaired by
RM2 million as at 30 September 2019.
Required:
a) Calculate the consolidated goodwill at the date of acquisition
of Chempaka. Show your
workings.
(CLO3:PLO3:C4)
b) Prepare the consolidated statement of profit or loss for
Melor for the year ended
30 September 2019. Relevant workings are to be disclosed.
(CLO3:PLO3:C4)
In: Accounting
Book Review
Enron, Intelligence, and the Perils of Too Much Information in What the Dog Saw. Malcolm Gladwell,
2009.
In: Accounting
In: Accounting
In its first year of operations Best Corp. had income before tax of $420,000. Best made income tax payments totaling $157,000 during the year and has an income tax rate of 35%. What was Best's net income for the year?
In: Accounting
Outline three possible arguments for not recognising internally generated Goodwill as an intangible asset in accordance with NZ IAS 38.
(b) As of 30 June 2020, Rezar Ltd has the following intangible assets to report in the financial statements.
(i) The company has acquired patents on 1 July 2016 for $45,000. This patent allows the production of 300,000 units. During the year ended 30 June 2020, the company produced 36,000 units.
(ii) Externally acquired Goodwill as at 1 July 2019 was $85,000. Goodwill has been impaired by $10,000 during the current year.
(iii) On 1 October 2019, the company acquired a franchise for $27,000 for 5 years. There is great demand for this franchise in the current market, and it has a fair value of $23,000 as of 30 June 2020.
Required: Explain how each of the above intangible assets should be measured in accordance with NZ IAS 38 as of 30 June 2020. Your answer should include the most appropriate model or models available to Rezar Ltd to measure above intangible assets, amortisation (if any), impairments (if any) and the closing balances as at 30 June 2020. Show all calculations. No journal entries required.
In: Accounting
In evaluating the adequacy of the allowance for doubtful accounts, an auditor most likely reviews the entity’s policy of granting credit to customers to support management’s financial statement assertion of
Multiple Choice
Existence.
Completeness.
Valuation and allocation.
Rights and obligations.
In: Accounting
Morrow Co. had an ending balance of $1900 for equipment. The company purchased $2300 of equipment and retired $750 of equipment during the year. What was the beginning balance of the account?
In: Accounting
Ornamental Sculptures Mfg. manufactures garden sculptures. Each
sculpture requires 8 pounds of direct materials at a cost of $3 per
pound and 0.4 direct labor hours at a rate of $14 per hour.
Variable manufacturing overhead is charged at a rate of $3 per
direct labor hour. Fixed manufacturing overhead is $3,300 per
month. The company’s policy is to maintain direct materials
inventory equal to 20% of the next month’s materials requirement.
At the end of February the company had 4,680 pounds of direct
materials in inventory. The company’s production budget reports the
following.
| Production Budget | March | April | May | |||
| Units to be produced | 4,300 | 4,900 | 5,600 | |||
(1) Prepare direct materials budgets for March and
April.
(2) Prepare direct labor budgets for March and
April.
(3) Prepare factory overhead budgets for March and
April.
In: Accounting
Electro Company manufactures an innovative automobile
transmission for electric cars. Management predicts that ending
finished goods inventory for the first quarter will be 44,400
units. The following unit sales of the transmissions are expected
during the rest of the year: second quarter, 222,000 units; third
quarter, 284,000 units; and fourth quarter, 461,500 units. Company
policy calls for the ending finished goods inventory of a quarter
to equal 20% of the next quarter's budgeted sales.
Prepare a production budget for both the second and third quarters
that shows the number of transmissions to manufacture.
In: Accounting
Accounting for Organization Costs
Perry Inc. was organized during 2019 and started operations on January 1, 2020. Cash expenditures during 2019 were the following.
| Professional fees (attorney fees) for articles of incorporation | $100,000 |
| Professional fees (accounting fees) to research tax status of organization | 75,000 |
| Meetings and promotional activities incidental to organization | 75,000 |
| Filing and related fees | 25,000 |
| Purchase of office equipment | 250,000 |
Required
Prepare a 2019 summary journal entry to record the cash expenditures related to the startup of the new company.
| Account Name | Dr. | Cr. |
|---|---|---|
| AnswerCashNote ReceivableDiscount on Note ReceivableEquipmentAccumulated DepreciationFranchiseGoodwillPatentSoftware Intangible AssetTrademarkNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockSales RevenueAmortization ExpenseLegal ExpenseOrganization ExpenseResearch and Development ExpenseSoftware Amortization ExpenseSoftware Development ExpenseGain on saleImpairment LossN/A | Answer | Answer |
| AnswerCashNote ReceivableDiscount on Note ReceivableEquipmentAccumulated DepreciationFranchiseGoodwillPatentSoftware Intangible AssetTrademarkNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockSales RevenueAmortization ExpenseLegal ExpenseOrganization ExpenseResearch and Development ExpenseSoftware Amortization ExpenseSoftware Development ExpenseGain on saleImpairment LossN/A | Answer | Answer |
| AnswerCashNote ReceivableDiscount on Note ReceivableEquipmentAccumulated DepreciationFranchiseGoodwillPatentSoftware Intangible AssetTrademarkNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockSales RevenueAmortization ExpenseLegal ExpenseOrganization ExpenseResearch and Development ExpenseSoftware Amortization ExpenseSoftware Development ExpenseGain on saleImpairment LossN/A | Answer | Answer |
In: Accounting
IFRS 16
The agreed contract price is $96,000. How should this price be allocated to performance obligations? Llama limited sells and equipment on January 01, 2019 which she bought on January 01,2016 for $6,000, and has been depreciating the equipment each year at 25% per annum on a straight line basis.
It trades this equipment in for new one costing $10,000 pays the supplier $9,200 in cash. What is the gain or loss on the disposal of the old equipment?
Unicorn Express Co. pays $80,000 to replace a major component of a factory machine. The faulty component that is replaced is sold for $4,000. The carrying amount of the machine before the replacement is $900,000, of which $20,000 relates to the faulty component being replaced.
Calculate the revised carrying amount of the machine after the replacement occurs and the profit or loss disposal of the faulty component.
In: Accounting
Marty and Jean are married and have 4-year-old twins. Jean is going to school full-time for 8 months of the year, and Marty earns $45,400. The twins are in day care so Jean can go to school while Marty is at work. The cost of day care is $8,600. What is their child and dependent care credit?
In: Accounting